The Bitcoin has been experiencing exponential growth in value since its introduction in 2009 and many advocates are expecting this to continue for many more years to come. 2013 was one of the most turbulent periods for the rising digital currency with the price jumping from $40 to $72 as European investors responded to the Cyprus banking crisis. By November 2013 the currency was being traded at $1,200. However, after the collapse of MtGox, a Bitcoin exchange located in Japan, the value of the currency fell to $615.
Nevertheless, many industry experts remain optimistic that the value of the currency will increase based on the predictions of Geoff Lewis, the man often referred to as the “Bitcoin Jesus”. But Lewis is not the only one predicting the Bitcoin boom. A report released back in December, by Gil Luria a Wall Street analyst projected that the currency will increase to $100,000 in the near future. Although this is a long way from the current trading price, it is entirely possible considering the 8,723% increase in 2013 and the fact that it is accepted universally, accessible via the internet, and portable.
Now the burning question here is: What really differentiates Bitcoins from the dollar? Bitcoin was first created back in 2009 by Satoshi Nakamoto a cryptography graduate from Trinity College located in Dublin who wanted to create a secure method for people to trade electronically.
Large retailers such as Walmart embraced the new currency by offering Bitcoin gift cards and popular online websites such as WordPress and Reddit started to accept payments in Bitcoin shortly after its introduction.
Bitcoin is digital; hence it is not government regulated and does not require physical production or a “storage space” in comparison to the dollar. As we all know Bitcoin is highly volatile, thus the trading price today could be completely different from the trading price two weeks later. However, what most people are oblivious to is the causes of the rapid fluctuation in price.
One main factor that has influenced the price of Bitcoin is the number of miners available at any specific time. Bitcoin mining is essential for processing Bitcoin transactions; the more miners available, the safer the trading network is. Other influential factors include the number of sellers and buyers and large corporations “dumping” fiat currency.
The recent stability in the price has attracted many retailers to the currency and in the words of Nicolas Colas, the chief market strategist at CoverageEx, “Bitcoin is experiencing a breakthrough moment” and we can only anticipate a continuous increase in value as time progresses.
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